Backdating Case Brings a Prison Term

Tuesday

Jan 29, 2008 at 5:01 AM

The former chief financial officer of SafeNet, a maker of computer network security products, was sentenced to six months in prison and fined $1 million.

The former chief financial officer of SafeNet, a maker of computer network security products, was sentenced Monday to six months in prison and fined $1 million for securities fraud in connection with an options backdating case.

The former executive, Carole D. Argo, pleaded guilty to securities fraud, admitting that she backdated millions of dollars’ worth of employee stock option grants at SafeNet.

Ms. Argo was sentenced by Judge Jed S. Rakoff of United States District Court in New York, who said she deserved a lenient sentence because of her charitable work and because her crime was less serious than the more spectacular financial frauds of the last decade.

Judge Rakoff said federal sentencing guidelines in the case called for a prison term of 9 to 10 years. The federal probation office had recommended a sentence of nearly five years.

He also said the $1 million fine sent a stern message.

Before she was sentenced, Ms. Argo, 46, of Baltimore, sobbed and said: “My apologies to everyone who was harmed by this.”

Paul A. Engelmayer, her lawyer, said she had already given back $236,000 in profits. He said it was unlikely she could afford the $1 million fine.

Federal prosecutors said she had conspired with others to backdate option grants routinely so that they appeared to have been issued when SafeNet’s stock price was at a periodic low point.

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